The European Union (EU) has adopted a law addressing the lack of competition, poor regulatory oversight and low levels of investment that have long hampered the development of an efficient and coherent rail transport system across Europe.

ACT

Directive 2012/34/EU of the European Parliament and of the Council of 21 November 2012 establishing a single European railway area (recast)

SUMMARY

As a result of laws to gradually open up the market and revitalise rail transport, rail’s modal share has now stabilised after years of decline. Nevertheless, achieving a single European rail market has proven difficult. Europe’s market has been open for rail freight transport since 2007 and for international passenger services since 2010. Consequently, the Directive applies, with minor exceptions, to all railway lines of the European Union as well as the facilities and services necessary to access the rail system and operate trains in the EU.

Directive 2012/34/EU, establishing a single European railway area, merges previous directives (“the first Railway Package”) and their successive amendments into one act. It also adds important substantive changes to tackle the lack of competition, poor regulation and low investment observed in the rail market in the last decade. It applies to the rail freight and international passenger market segments.

More competition

Market access conditions were insufficiently precise and thus worked in favour of the incumbent organisations (often, national monopolies). To address this issue, the directive:

Sets an exhaustive list of conditions for the licensing of railway undertakings on an EU wide basis and the access to licensing data;

requires more detailed network statements: these are documents published yearly providing characteristics of the available infrastructure and the conditions for its use;

ensures the non-discriminatory access of rail operators to rail-related services, such as railway stations, freight terminals and maintenance facilities. A service provider belonging to a body with a dominant position on the railway market in question must be independent (with separate accounts and organisational and decision-making, although there is no need to create a separate legal entity);

provides for competitive and non-discriminatory charges for using the infrastructure, facilities and services,

lays down rules on conflicts of interest and unfair practices in rail-related services.

National rail regulators must be independent. They cannot have any stakes in regulated companies, their nomination must be done by authorities not exercising direct shareholder rights in regulated companies, and there are other clauses to protect their independence (e.g. there are new rules on cooling-on and cooling-off periods to control staff movements between the regulator and the regulated undertakings). Their competence to impose sanctions and conduct audits has been enhanced and they must work with their counterparts on cross-border issues. Their powers have been extended to cover rail-related services in order to eliminate discriminatory barriers.

Funding of infrastructure managers

Investment in the rail infrastructure is to be improved by longer-term planning, giving more certainty to investors. By December 2014, EU countries must publish an indicative rail infrastructure development strategy with a view to meeting future mobility needs in terms of maintenance, renewal and development of the infrastructure. This will be based on the sustainable financing of the railway system and have due regard to the Union’s state aid rules. It will cover a period of at least five years and be renewable and should also take into account the EU’s general needs, including the need to cooperate with neighbouring countries.